Home buyers often come to me wanting to find “a deal.” Of course everyone wants “a deal.” Usually the only way to get “a deal” is to find a property that needs work. This could be roof repairs, an outdated kitchen, old carpet, inoperable HVAC system, or any number of other issues that need to be addressed to make the home marketable. Sometimes these issues are minor and sometimes they are major – and expensive. And it often means agreeing to purchase the home “as-is”.
Agreeing to purchase a property “as-is” is a serious decision for any buyer. It means you are agreeing to purchase the home in its current condition, regardless of that condition.

What exactly does “as-is” mean? It depends upon how the contract is written and agreed upon with the seller. In some cases, the seller, such as a bank with a foreclosed property, will not agree to a home inspection prior to completion of the contract. In other words, you get a quick look at the property and agree in writing to purchase the home and close on the deal without any further inspections. These can be great “deals” but can also be quite risky, and I suggest these types of deals only for very experienced home buyers who are used to rehabbing a lot of homes. Experienced rehabbers may have more of a financial cushion for the unknowns they may encounter and may be able to absorb unexpected costs across several properties.
In most cases when purchasing as-is, the seller will agree to allow the buyer a home inspection prior to closing. In this case, the buyer can have their inspector look at the home, and then the buyer can either agree to close or cancel the transaction and get their earnest money back. Of course these terms have to be agreed to between the buyer and seller before the contract is finalized. In almost all cases the seller will not make any repairs found by the buyer during the home inspection, since the property is being sold “as-is.” In these types of transactions, the buyer has two options after inspection – proceed to closing to cancel the contract.
Tips for buying an “as-is” house
If you think you may be interested in purchasing an “as-is” home, keep these things in mind:
- Buying an as-is home requires strong financial wherewithal. Don’t expect to get a 100% loan on an as-is property. Lenders know you will need to have cash to repair and update a home.
- Lenders will not loan on a home that won’t pass appraisal requirements. Stairway doesn’t have a handrail? Electrical panel not up to code? Roof has a leak? Forget about getting a loan without a significant down payment and most likely a track record of rehabilitating old homes.
- Do not underestimate the time it takes to rehabilitate an “as-is” home. Even if you do the work yourself, it takes time to do the repairs, and time is money – as in all the time it takes to do the repairs, you have to make your monthly loan payments and keep utilities on. And insurance. And taxes. If you’re flipping the house, carrying costs can eat up profit quickly.
- Make sure you are able to perform inspections as part of any purchase contract. Even if they seller will not agree to repairs, at least you can have a qualified inspector review the home and provide you with feedback on what they find, and you can then decide whether to proceed with the purchase or not.
- Be aware that sometimes there are hidden “gotcha’s” when purchasing an “as-is” house that even a good home inspector can’t uncover, which can cost big money to repair. These homes have often lacked regular maintenance. Tenants may have moved out and the seller has no idea what problems may exist with the home.
Buying an as-is home can be financially rewarding, but is fraught with risk. The higher the reward, generally the higher the risk. Make sure you are comfortable with that risk and have the financial ability to deal with a “worst case scenario” before making an offer on an “as-is” home. There is money to be made, but there is also money to be lost. Choose wisely.